SMPI Assumptions
General assumptions have been made about the nature of your investments and their likely performance. These assumptions may not correspond with your actual investments or their actual performance. The statutory assumptions used to determine the estimated annual pension above are:
- Inflation will be 2.50% a year between now and retirement
- Contributions remain invested in the funds that they are currently invested
- An annual 7.00% rate of return on all funds except the cash fund which is 2.7%
- An Annual Management Charge of 0.090% is deducted from your fund each year
- The pension you buy will increase each year in line with inflation - assumed to be 2.5%
- You are married and your spouse will be paid half of your pension when you die
- That men are three years older and women are three years younger than their spouse
- The tax legislation currently in force does not change before your retirement.
These additional assumptions apply to active members only:
- Contributions to L&G continue at your current level
- Your Pensionable Salary and the M Plan cap increase at 2.5% annually in line with estimate price inflation.
Numbered Points
1. Target Retirement Age (TRA) - your TRA is the age you have selected as your anticipated retirement age (if you are in Lifestyle or Lifestyle1997). Age 63 will be shown if you have not selected a retirement age or if you Freestyle your contributions.
2. Smart* - any Smart* contributions elected by you.
3. Conversion of your projected fund to pension - the annuity rates used in the illustration reflect annual interest rates from British Government Index-Linked securities on 15 February 2011. It also assumes an expense deduction of 4% of your projected fund value. Please note annuity rates can go up or down.
4. Current Investment - The contribution and investment election in force on 31 March 2011.
5. Investment Returns - investment growth on your Retirement Account will depend on overall market conditions and the way the fund is invested, both now and in the future.
6. Annual Management Charge (AMC) - the AMC varies depending on the fund. The figure used in the illustration is 0.090%. Tthis is the charge applied to the majority of the funds within the IBM Pension Plan.
7. M Plan Cap - the M Plan Cap restricts earnings for pension purposes. The M Plan Cap was £247,200 in 2010/11 and is £259,200 in 2011/12.
General Points about your Pension
A On your retirement, or death if earlier, the value of your Retirement Account will be used to purchase benefits for your and/or your dependants. The benefits purchased will depend on the following:
- The level of contributions being invested
- The period over which the contributions are invested
- The investment return achieved on your fund up to withdrawal and the type of investment used
- The cost of purchasing pensions at retirement or death
- Your chosen retirement date
- The rate you choose to have your pension increased by each year
- Any allowance you make for a pension for your spouse.
B The illustration on the front page has been provided based on specified statutory assumptions. What actually happens may vary considerably from what has been assumed and your actual pension may be significantly different from the amount shown.
C Under HM Revenue & Customs legislation, your pension may need to be restricted to take account of any pension benefits you may have with other pension providers.
D If you have any pension debit or earmarking orders resulting from divorce proceedings, an allowance has been made in this illustration.
E Details of the investment options currently available can be found on the Pensions Trust Website.
This statement has been prepared in accordance with relevant legislation and Technical Memorandum 1.4 (TM1.4) issued by the Board of Actuarial Standards. TM1.4 details the information that has to be provided in this statement and the assumptions that must be used.
Last Updated: 18/05/2012
